Despite clients showing continued caution and asking agencies to do more for less, consumer PR consultancies continue to thrive, reports Kate Magee.

When interviewed for last year's consumer league tables feature, Grayling's MD of consumer brands Daniel Cohen said the main buzz words in meetings were 'content, community, influence, engagement and experience'. Fast-forward a year and the landscape does not appear to have changed that radically. Content creation and maintaining a vibrant community continue to be a key focus for brands.

As in other sectors, agencies are being asked to do more with less. Clients are still being cautious with their budgets but are expecting more from their agencies.

As discussed in a previous feature ('The perils of pitching'), new business pitching is increasingly competitive and procurement-driven. But with the online world providing a wealth of data, smart agencies and brands should be able to use this to prove the value of PR campaigns, as well as using the insights to create more engaging consumer campaigns.

The latest Top 50 Consumer Consultancies table shows healthy growth from the majority of agencies. Freud Communications has taken the top position again, but this time with a growth in fee income of 14 per cent, compared with 2010's six per cent. Edelman has shot up into second position from fifth, with 33 per cent growth.

Below, we explore the key trends in consumer PR in more depth.

TABLE ANALYSIS

We Are Social had the biggest overall growth with 102 per cent. This was the second year in a row it has experienced triple-digit growth.

Four Communications (59 per cent) and Mischief PR (45 per cent) both saw large growth, although a large portion of this is due to acquisitions. Four bought BGB Communications and Colman Getty last year. Mischief PR was bought by Engine and merged with Slice PR.

Other notable growers include The Communications Store (37 per cent), Threepipe (27 per cent) and one of the youngest agencies in the table, PrettyGreen (26 per cent).

While the majority of the agencies experienced growth in fee income, Lexis saw a ten per cent dip, impacted by the loss of its £1m Boots account. Golley Slater saw the biggest drop of 27 per cent, although its overall fee income was only down nine per cent and consumer PR now accounts for ten per cent less of its total income.

MARKET WATCH Costs outstrip revenues

The Communications Store's founding director and partner Julietta Dexter sums up the landscape by saying: 'Budgets have come back, slowly and surely. However, clients are asking for more and more for their investment.'

The Red Consultancy's CEO Mike Morgan agrees that overall budgets are tight and buying is still cautious and careful. However, he adds that there are some signs of more bravery emerging as 'experimentation wins over safety first'.

'Clients are now planning quarterly campaigns and rarely committing to budgets for a whole year or even six months,' he adds.

Frank PR's chairman Graham Goodkind worries that this consistent downward pressure on fees combined with increased costs, such as wages, inflation, rent and rates, will have a negative impact on agency profitability.

'Costs have gone up more than revenues. PRWeek's Top 150 PR Consultancies may have shown an average of nine per cent growth in revenues, but costs will have increased by more. This business has been harder to make money in during the past 12 months,' he says.

Goodkind believes that the answer for Frank is to look elsewhere for higher levels of growth. It is currently setting up an office in New York because he believes there is a gap in the market for a mid-sized consumer agency to sit between the smaller boutique lifestyle agencies and the large networks.

Educating procurement departments about the value of PR may also help. Freud Communications' MD Nick Mulholland says that for one global client, for which it handles four different brands, the agency only has one procurement contact.

'This person completely understands our business, where we can best add value to its business and ensures only the correct briefs come to us,' he says. 'I hear tales of procurement people within other organisations changing every six months, which means that agencies have to start the education process all over again.'

BRAND WORK Content creation at the heart of campaigning

Sectors including food and drink, luxury and consumer technology have continued to be fertile ground for consumer PR. But what connects them all is a greater focus on content creation, now common to most campaigns.

'The role of content to bring brands to life is more than a trend, it's now par for the course. It's about telling compelling stories across a range of media,' says Exposure's CEO Raoul Shah.

Clients are increasingly looking for content that works across different digital channels, which shows their desire for a more sophisticated online strategy.

'It used to be about creating a website, then a Facebook page, and now clients are asking what circular conversations we can create across a range of platforms,' says Shah.

Red's Morgan agrees. While he adds that few clients are willing to focus 100 per cent on social over traditional media, he says: 'There is more awareness of the need for online spend to drive content creation over the previous naive belief that "social" is free.' It may be a bit of a consumer PR cliche, but Morgan says that celebrity associations still deliver. 'The celebrity industrial complex continues to thrive. It used to be led by tabloids. Now it's the weekly gossip magazines and major media websites that want that content as well. That's good news for TOWIE stars but also for the A-listers,' he says.

Where it has evolved, says Shah, is that consumers are more savvy about celebrity endorsement and demand a deeper engagement.

For example, on his agency's recent work for Diet Coke, designer Jean Paul Gaultier was hired as the creative director for the entire campaign across all platforms. 'This was not just about asking him to design a special edition can. It was transitioning to a proper partnership,' says Shah.

Meanwhile, integration and the blurring of the lines between marketing disciplines continues. For example, Exposure has pitched against seven large advertising agencies during the past 12 months.

TRUST, COMMUNITY AND SOCIAL BENEFIT The need for PR to forge strong relationships

This need for a strong community and meaningful relationships with consumers was highlighted during last month's PRWeek Crisis Communications conference. Citibank's director of corporate comms EMEA Jonathan Woodier said he did not see other banks as rivals because they did not have the same global capacity. Instead, he viewed 'supermarkets, Google and Facebook as competitors because they have huge global customer networks that like them, and may be a threat if they decided to become a bank'. This shows that consumers' connection with a brand is viewed by some as more powerful than even the service that it provides. It is the strength of a brand's relationships and networks that makes it powerful.

But in order to win this trust, brands have to be perceived to be socially responsible. 'Sustainability and social conscience have become more central to a brand's credibility than its ability to share and grow equity. It's part of the checklist for a great brand,' says Exposure's Shah.

Freuds' Mulholland says that many brands have congregated around price or value-related messaging given the importance of budgeting for so many households.

However, he argues that differentiation and 'value within values' continues to grow as a trend.'More and more brands are developing "purpose marketing" initiatives that add a feel-good factor to purchases. We'll see more of this in 2012,' he says.

THE FUTURE What's next for consumer PR?

More direct consumer engagement

'Trust in media and,as a consequence, third-party endorsement,has taken a knock and we are not seeing signs of it bouncing bank any time soon,' says Freuds' Mulholland. At the same time, people are turning to sources closer to home for advice, guidance and opinion. In Edelman's latest Trust Barometer, the power of opinion from people with whom respondents identified ('people like me') was much higher than in previous years.

'This year, we will continue to see an increase in the number of campaigns that are less reliant on traditional media, but are instead aimed at direct consumer engagement via online groups and social networks in order to regain that vital element of trust in brand messages. Brand owners need to brace themselves for this change,' says Mulholland.

DATA

'Data will be the most important area for agencies to learn to manage and wrap into their core business. Smart data analysis will give great ROI measurement and target the consumer better. It will be a big area of investment,' says Exposure's Shah.

Mulholland argues that data will also help clients to produce increasingly targeted campaigns that reach out to a small but well-defined group on whom a brand can have greater impact and who might in turn act as brand advocates. He believes this will be an important future trend as clients' digital requirements become more sophisticated as they realise that mass awareness and maximum reach are not always the best use of resource. 'Digital is the perfect channel for this type of micro-targeting,' says Mulholland.

'What's also a boon for us is that digital engagement is actually measurable,' he adds. 'There's a big difference between reporting that "X" number of people might have seen an article and "Y" number of people who definitely watched a video and then forwarded it to their friends.

This is the sort of accountability that will finally help convert the few remaining disbelievers in the power of our disciplines.'